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Managing Environmental Risk in Presence of Climate Change: The Role of Adaptation in the Nile basin of Ethiopia

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  • Di Falco, Salvatore
  • Veronesi, Marcella

Abstract

This study investigates the impact of climate change adaptation on farm households’ downside risk exposure in the Nile Basin of Ethiopia. The analysis relies on a moment-based specification of the stochastic production function. We use an empirical strategy that accounts for the heterogeneity in the decision on whether to adapt or not, and for unobservable characteristics of farmers and their farm. We find that (i) past adaptation to climate change adaptation reduces current downside risk exposure, and so the risk of crop failure; (ii) climate change adaptation would have been more beneficial to the nonadapters if they adapted, in terms of reduction in downside risk exposure; and (iii) climate change adaptation is a successful risk management strategy that makes the adapters’ more resilient to climatic conditions.

Suggested Citation

  • Di Falco, Salvatore & Veronesi, Marcella, 2012. "Managing Environmental Risk in Presence of Climate Change: The Role of Adaptation in the Nile basin of Ethiopia," 86th Annual Conference, April 16-18, 2012, Warwick University, Coventry, UK 134775, Agricultural Economics Society.
  • Handle: RePEc:ags:aesc12:134775
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    References listed on IDEAS

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    Cited by:

    1. Kim, Chung-Sil & Jung, Hye-Kyung & Lee, Sang-Ho & Park, Soo-Young & Takei, Atsuo, 2012. "An Analysis on Determinants of Farmers´ Adaptation to Climate Change in Korea," Journal of Rural Development/Nongchon-Gyeongje, Korea Rural Economic Institute, vol. 0(Issue 2), pages 1-20, July.
    2. Lokonon, Boris Odilon Kounagbè, 2016. "Crop diversification, downside risk exposure, and crop production in the Niger basin of Benin," 2016 Fifth International Conference, September 23-26, 2016, Addis Ababa, Ethiopia 246389, African Association of Agricultural Economists (AAAE).
    3. Tambo, Justice A. & Wünscher, Tobias, 2014. "Building farmers’ capacity for innovation generation: what are the determining factors?," 88th Annual Conference, April 9-11, 2014, AgroParisTech, Paris, France 170351, Agricultural Economics Society.
    4. Momanyi, Denis & Lagat, Prof. Job K. & Ayuya, Dr. Oscar I., 2016. "Analysis of the Marketing Behaviour of African Indigenous Leafy Vegetables among Smallholder Farmers in Nyamira County, Kenya," MPRA Paper 69202, University Library of Munich, Germany, revised 27 Jan 2016.
    5. Martina Bozzola & Melinda Smale & Salvatore Di Falco, 2016. "Climate, Shocks, Weather and Maize Intensification Decisions in Rural Kenya," CIES Research Paper series 40-2016, Centre for International Environmental Studies, The Graduate Institute.
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    7. Kassie, Menale & Teklewolde, Hailemariam & Erenstein, Olaf & Jaleta, Moti & Marenya, Paswel & Mekurai, Mulugetta, 2015. "Technology diversification: Assessing impacts on crop income and agrochemical uses in Malawi," 2015 Conference, August 9-14, 2015, Milan, Italy 211838, International Association of Agricultural Economists.
    8. Momanyi, Denis, 2016. "Analysis of the Marketing Behavior of African Indigenous Leafy Vegetables Among Smallholder Farmers in Nyamira County, Kenya," Research Theses 243443, Collaborative Masters Program in Agricultural and Applied Economics.
    9. Salvatore Di Falco & Marcella Veronesi, 2014. "Managing Environmental Risk in Presence of Climate Change: The Role of Adaptation in the Nile Basin of Ethiopia," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 57(4), pages 553-577, April.
    10. Julia Blasch & Mehdi Farsi, 2012. "Retail demand for voluntary carbon offsets - A choice experiment among Swiss consumers," IED Working paper 12-18, IED Institute for Environmental Decisions, ETH Zurich.
    11. repec:spr:ssefpa:v:9:y:2017:i:6:d:10.1007_s12571-017-0735-6 is not listed on IDEAS
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    13. Asfaw, Solomon & Lipper, Leslie, 2015. "Adaptation to Climate Change and its Impacts on Food Security: Evidence from Niger," 2015 Conference, August 9-14, 2015, Milan, Italy 225667, International Association of Agricultural Economists.
    14. Moniruzzaman, Shaikh, 2015. "Crop choice as climate change adaptation: Evidence from Bangladesh," Ecological Economics, Elsevier, vol. 118(C), pages 90-98.
    15. Zuluaga, Victor & Labarta, Ricardo & Läderach, Peter, 2015. "Climate Change Adaptation: The case of the Coffee Sector in Nicaragua," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205875, Agricultural and Applied Economics Association.
    16. Pascale Combes Motel & Johanna Choumert & Alexandru Minea & Thomas Sterner, 2014. "Explorations in the Environment–Development Dilemma," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 57(4), pages 479-485, April.
    17. Ines Kapphan & Pierluigi Calanca & Annelie Holzkaemper, 2011. "Climate Change, Weather Insurance Design and Hedging Effectiveness," IED Working paper 11-17, IED Institute for Environmental Decisions, ETH Zurich.
    18. Jikun Huang & Yangjie Wang & Jinxia Wang, 2015. "Farmers' Adaptation to Extreme Weather Events through Farm Management and Its Impacts on the Mean and Risk of Rice Yield in China," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 97(2), pages 602-617.
    19. Salvatore Di Falco & Marcella Veronesi, 2011. "On Adaptation to Climate Change and Risk Exposure in the Nile Basin of Ethiopia," IED Working paper 11-15, IED Institute for Environmental Decisions, ETH Zurich.
    20. Michele Baggio, 2012. "The Optimal Management of a Natural Resource with Switching Dynamics," IED Working paper 12-19, IED Institute for Environmental Decisions, ETH Zurich.
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    22. Teklewold, Hailemariam & Kassie, Menale & Shiferaw, Bekele & Köhlin, Gunnar, 2013. "Cropping system diversification, conservation tillage and modern seed adoption in Ethiopia: Impacts on household income, agrochemical use and demand for labor," Ecological Economics, Elsevier, vol. 93(C), pages 85-93.
    23. Thomas Epper & Helga Fehr-Duda & Renate Schubert, 2011. "Energy-Using Durables: The Role of Time Discounting in Investment Decisions," IED Working paper 11-16, IED Institute for Environmental Decisions, ETH Zurich.
    24. Salvatore Di Falco & Marcella Veronesi, 2011. "On Adaptation to Climate Change and Risk Exposure in the Nile Basin of Ethiopia," IED Working paper 11-15, IED Institute for Environmental Decisions, ETH Zurich.

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    Keywords

    Environmental Economics and Policy;

    JEL classification:

    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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